updated 05:25 pm EST, Wed February 22, 2012

HP winter quarter defined by broad PC losses

HP reported results for its quarter ended January that reflected a bruising in the PC business regardless of category. Its net earnings dropped 44 percent to $1.5 billion following a seven-point loss in revenue to exactly $30 billion after the core Personal Systems Group saw its revenue down 15 percent versus a year ago; the enterprise server group dipped 10 percent. The PSG's losses were mostly pinned on home users, as mainstream PCs made 25 percent less revenue while pro workstations were flat.

While HP has been hurt by the iPad and seen its shipments drop in the past, the newly recorded declines were nearly equally split at an 18 percent drop in notebooks and a 19 percent drop in desktops. The company didn't break down its computer-related server results but saw declines in each individual segment, hurt in part by its problems with its Itanium servers.

HP CEO Meg Whitman during a results call pinned issues on tough conditions in China and hard drive shortages that limited supply. About 30 percent fewer hard drives were available to the industry, she said. Some of the costs may also have been attributed to reorganization. The company did managed to match its guidance, albeit only after lowering them ahead of the results.

Whitman suggested that, now that she had more time to analyze the company after becoming CEO last year, HP might scale back its overall lineup significantly. The company had already had to break from its focuses on lower prices and market share at all costs and to refocus on quality and profit. There needed to be fewer product units, she said.

The executive held up the Envy 14 Spectre, a design meant to compete with the upscale approaches established by the MacBook Pro and MacBook Air, as an example of where HP needed to go. "We underinvested in innovation," she later added.

An outlook for the spring wasn't more positive, however, and was going to see slight drops in earnings from the winter. HP still saw hard drive shortages being a factor.